Chap 14 Questions for Review answers

Chap 14 Questions for Review answers -...

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Chap 14 Questions for Review answers 1. A competitive firm is a firm in a market in which: (1) there are many buyers and many  sellers in the market; (2) the goods offered by the various sellers are largely the  same; and (3) usually firms can freely enter or exit the market. 2. A firm’s total revenue equals its price multiplied by the quantity of units it sells.  Profit  is the difference between total revenue and total cost.  Firms are assumed to  maximize profit. 3. Figure 2 shows the cost curves for a typical firm. For a given price (such as  P * ), the  level of output that maximizes profit is the output where marginal cost equals price  ( Q * ), as long as price exceeds average variable cost at that point (in the short run), or  exceeds average total cost (in the long run). Total revenue can be measured by the  rectangular area with a height of 
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This note was uploaded on 01/16/2012 for the course PSYCH 373 taught by Professor Marthafaircloth during the Spring '09 term at Campbell.

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Chap 14 Questions for Review answers -...

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